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February 2, 2011

FRANCE: Renault spending $5.7bn on production

Renault, which will invest EUR5.7bn in its industrial sites between 2010 and 2013, plans to invest in high value added production in Europe and will continue to invest abroad, in particular in Brazil, India and Russia.

Renault, which will invest EUR5.7bn in its industrial sites between 2010 and 2013, plans to invest in high value added production in Europe and will continue to invest abroad, in particular in Brazil, India and Russia.

“To continue to grow, Renault needs competitive plants that are adapted to the markets in which they operate,” the automaker said in a statement.

In western Europe, the group is adapting capacity, continuing to improve performance and concentrating on high added-value products, primarily European mid-and upper range vehicles, LCVs, electric vehicles and motors, and batteries.

In the rest of the world, plant capacity is being expanded and performance improved so that Renault can make a strong contribution to growth in emerging markets.

“Manufacturing locally is essential in order to be competitive, responsive and to sell vehicles at the right price,” it said.

An electric motor will be made at the Cléon plant from 2013, a van added to the Sandouville plant in 2013, with potential output of 100,000 units/year once all versions have been launched, and production of a future European top range vehicle will start at Douai from 2014.

The Nissan alliance and strategic cooperation with Daimler are generating additional production volumes and contributing directly to the activity of industrial sites in Europe.

President and CEO Carlos Ghosn said: “Our strategic plan enables us to adjust industrial production capacity to global demand, without closing sites or implementing redundancy plans or staff departure plans.”

With production of the Zoe in Flins (France) and Renault Kangoo ZE in Maubeuge (France), by 2015, 80% of the electric vehicles sold worldwide by Renault will be produced in France.

In 2013, the Flins battery plant will come on stream (potential capacity of 100,000 batteries a year) while Cleon begins producing the third-generation motor.

The majority of LCVs are produced in France, and the new model at Sandouville (expected to see the end of JV production with GM at Luton in England) will supplement the Master built at Batilly (France) and Kangoo Express and ZE at Maubeuge.

Future upper range Renault vehicles (replacing Espace and Laguna) will be produced at Douai from 2014, on a platform shared with Nissan. This new platform will generate substantial economies of scale for both companies.

Cléon has also been assigned the new 1.6 dci 130 engine starting this year.

Renault noted it was exporting engines and gearboxes to Nissan and other brands, such as Opel and Chery. In 2010, for example, a quarter of the gearboxes produced at Ruitz and Cléon were exported to China for Chery and Nissan and 60% of the engines built at Cléon were sold outside of France.

“Spain is the group’s second largest production centre in Europe and the future of its four plants is assured,” Renault said.

Twizy, the brand’s third electric vehicle, will come into production in Valladolid this year. The Valladolid Motores powertrain plant is reaping the benefits of cooperation with Nissan and Daimler, Seville remains the Group’s biggest gearbox producer while Palencia is building the Mégane.

In Slovenia, the Novo Mesto plant is producing compact vehicles – Twingo, Wind and Clio Campus – for European markets. In 2013, it will also start producing the four-seat Smart for Daimler.

Locating industrial facilities in emerging markets fuels growth in those markets and compensates for the decline in European markets. Over the past 10 years, Renault has increased its penetration of emerging markets, thus increasing its international footprint. Sales outside Europe now account for 37% of total sales, compared with 17% in 2000, and in 2011 the proportion is expected to rise to 43%.

In Morocco, the Tangiers plant will start up its first production line with 30 vehicles per hour in 2012. The second production line will come on stream in 2013 to meet demand for entry-level vehicles across Europe, Africa, Mexico and the Middle East.

The Global Training Centre (GTC) in Flins was opened last 25 May and coordinates all training necessary for the various manufacturing activities worldwide. Its goal is to keep pace with a constantly evolving business and ensure that all the skills necessary for production start-ups are available. From 2010 to 2012, 23 of the group’s plants will be starting up new production.

Monozukuri, an approach already adopted by Nissan some years ago, is set to come into everyday use by group staff worldwide.

The objective is to cut the total cost of a vehicle while optimising quality.

The method involves working on the entire value creation chain, starting with vehicle design and continuing with the detailed design of each component, cooperation with suppliers, packaging and shipment of components, lineside delivery and assembly on the vehicle, through to delivery to the end customer.

Between 2010 and 2013, Renault will invest EUR5.7bn in its industrial sites, of which 40% are in France.

The automaker sees a lasting decline in the European market – in 2010, vehicle sales (15.3m) were 20% lower than in 2007 and the annual declines wer -7.2% in 2008, -4.5% in 2009 and -3.6% in 2010.

“Forecasts for 2016 do not see the European auto market returning to its pre-crisis level of 2007. Automobile growth will be driven by markets outside of Europe,” Renault said.

Sales in the BRIC countries (Brazil, Russia, India and China) have increased four-fold in the past 10 years and now account for 1/3 of car sales worldwide.

In 1990, 82% of new cars were sold in the United States, Europe or Japan. In 2007, the percentage was 62% and today, it is less than 50%.

The non-European market is expected to expand by nearly 50% from 2010 to 2016.

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